Satellite capacity will play a bigger role in Asia, particularly in countries such as India and Bangladesh, where there are fewer terrestrial alternatives for telecoms and data services, according to REACH CEO Alistair Grieve. REACH is one of the largest wholesale carriers in Asia. It delivers voice, data, IP and satellite products across Asia, and to the rest of the world. It has landing rights, backhaul, operating licences and bilateral agreements in most major markets in the region, enabling telcos across the world to connect to markets in the region.

Satellite capacity is an important part of the equation and a valuable part of REACH’s business. Grieve told Interspace: “Satellite is an appropriate solution on the smaller routes in SE Asia, Central Asia, India etc. In terms of bandwidth, it will never come close to the huge bandwidths we are providing in the major markets of NE Asia in terms of cable. But, nevertheless, it is high-value business. In terms of megabits it is very small but in terms of value, it is quite high because these are hard to reach routes which are not necessarily vastly-oversupplied with capacity which is the case for countries such as Japan, South Korea, Taiwan, Singapore and so on.”

REACH has signed a slew of deals in recent months with operators such as New Skies Satellites, AsiaSat and Intelsat and is a key target customer for satellite operators wanting to derive greater revenues in Asia. REACH spends millions each year on satellite capacity. Grieve said: “I think the total spent of satellite capacity will be roughly in the region of $20 million in 2003. That is for everything. That includes broadcast and VSAT [very small aperture terminals] services, but it also includes our thin route telecoms services to countries carrying IDD and data traffic, which are not connected to our optical fiber network. That is the total spent on space segment capacity.”

REACH owns the largest commercial satellite earth station complex in the region. From its Stanley teleport in Hong Kong, it has access to most satellites in the region, at least at C-band. It is also investing to upgrade the Ku-band facilities at the Stanley teleport. The services are mainly hubbed out of Hong Kong. It also has earth station facilities in Australia. The vast majority of REACH’s bandwidth services are concentrated on the cable side, but its satellite infrastructure is increasingly being used for broadcast applications services and more recently for VSAT and IP-over-satellite.

The markets in SE Asia for telecoms services are expected to show significant growth. Grieve said: “The numbers of options available to us for serving these markets is considerable. We are increasing our sales and sales support efforts to address markets in SE Asia, Indonesia etc. I think we will probably see growth of 30 per cent in these markets per annum in terms of bandwidth utilisation. Whether we would see that in terms of revenues, given pricing pressure that everyone is under, is hard to say.”

Satellite may be a small part of the business, but it is an important one for the company. Grieve said: “Recently, we have put a lot of effort in attracting the business from the large operators such as Intelsat and New Skies. We have had a very long-term relationship with Intelsat in particular. They have put their faith in us to provide them with teleport services based in Hong Kong. We see that as a good market and growing market.”

Pricing pressure in the region has been significant for capacity, although Grieve expects that to stabilise in 2003. Last year, REACH doubled the volume from its data services part of its business. But, while there was huge volume growth, prices halved. Grieve commented: “We have seen a lot of turmoil in the business and many operators are selling services below their operating costs. So irrespective of whether they have been able to clean up their debt and their balance sheet. The point is a lot of pricing has come down below operating cost and that is unsustainable in everything but the short-term. So, the economics indicate there will be more price stability and I think we will see that coming into the market during the course of 2003, perhaps not straight away but certainly over the next few months in terms of prices.” –Mark Holmes